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Algorithm and examples
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Replacement Model-2 |
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| Year | 1 | 2 | 3 | 4 | 5 | | Running Cost | 0 | 100 | 200 | 300 | 400 |
Machine Cost = 500 and Discounted Rate = 5%
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | | Running Cost | 10000 | 10000 | 10000 | 10000 | 10000 | 13000 | 16000 | 19000 | 22000 | 25000 |
Machine Cost = 60000 and Discounted Rate = 10%
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | | Running Cost | 60000 | 60000 | 60000 | 60000 | 60000 | 80000 | 100000 | 120000 | 140000 | 160000 |
Machine Cost = 500000 and Discounted Rate = 10%
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | | Running Cost | 120000 | 120000 | 120000 | 120000 | 120000 | 140000 | 160000 | 180000 | 200000 | 220000 |
Machine Cost = 250000 and Discounted Rate = 10%
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Solution
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Solution provided by AtoZmath.com
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Replacement Model-2 calculator
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1. An engineering company is offered a material handling equipment A. It is priced at
Rs 60,000 includeing cost of installation. The costs for operation and maintenance are estimated to be
Rs 10,000 for each of the first five years, increasing every year by Rs 3,000 in the sixth and subsequent years.
The company expects a return of 10 percent on all its investment. What is the optimal replacement period?
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
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| Running Cost | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 13,000 | 16,000 | 19,000 | 22,000 | 25,000 |
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2. A company is buying mini computers. It costs Rs 5 lakh, and its running and maintenance costs are Rs 60,000
for each of the first five years, increasing by Rs 20,000 per year in the sixth and subsequent years.
If the money is worth 10 percent per year, What is the optimal replacement period?
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
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| Running Cost | 60,000 | 60,000 | 60,000 | 60,000 | 60,000 | 80,000 | 1,00,000 | 1,20,000 | 1,40,000 | 1,60,000 |
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3. A company is buying mini computers. It costs Rs 2,50,000, and its running and maintenance costs are Rs 1,20,000
for each of the first five years, increasing by Rs 20,000 per year in the sixth and subsequent years.
If the money is worth 10 percent per year, What is the optimal replacement period?
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
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| Running Cost | 1,20,000 | 1,20,000 | 1,20,000 | 1,20,000 | 1,20,000 | 1,40,000 | 1,40,000 | 1,60,000 | 1,80,000 | 2,00,000 |
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